Novo Nordisk A/S shares fell by -1.8% during the day's afternoon session, and are now trading at a price of $48.26. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.
Novo Nordisk A/S Is Potentially Undervalued and Trades Below Its Graham Number:
Novo Nordisk A/S, together with its subsidiaries, engages in the research and development, manufacture, and distribution of pharmaceutical products in Europe, the Middle East, Africa, Mainland China, Hong Kong, Taiwan, North America, and internationally. The company belongs to the Health Care sector, which has an average price to earnings (P/E) ratio of 22.94 and an average price to book (P/B) ratio of 3.19. In contrast, Novo Nordisk A/S has a trailing 12 month P/E ratio of 13.3 and a P/B ratio of 1.26.
Novo Nordisk A/S has moved -51.6% over the last year compared to 14.3% for the S&P 500 — a difference of -65.9%. Novo Nordisk A/S has a 52 week high of $112.52 and a 52 week low of $45.05.
Wider Gross Margins Than the Industry Average of 57.85%:
| 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $122,021 | $126,946 | $140,800 | $176,954 | $232,261 | $290,403 |
| Gross Margins | 84% | 84% | 83% | 84% | 85% | 85% |
| Net Margins | 32% | 33% | 34% | 31% | 36% | 35% |
| Net Income (M) | $38,951 | $42,138 | $47,757 | $55,525 | $83,683 | $100,988 |
| Net Interest Expense (M) | $220 | $390 | $289 | $378 | $542 | $1,640 |
| Depreciation & Amort. (M) | $5,661 | $5,753 | $6,025 | $6,553 | $7,289 | $8,545 |
| Earnings Per Share | $16.38 | $18.01 | $10.37 | $12.22 | $18.62 | $22.63 |
| EPS Growth | n/a | 9.95% | -42.42% | 17.84% | 52.37% | 21.54% |
| Free Cash Flow (M) | $46,782 | $51,951 | $55,000 | $78,887 | $108,908 | $120,968 |
| Total Debt (M) | $3,009 | $2,897 | $12,961 | $24,318 | $20,528 | $89,674 |
| Net Debt / EBITDA | -0.21 | -0.16 | 0.03 | 0.14 | 0.06 | 0.54 |
| Current Ratio | 1.06 | 0.94 | 0.86 | 0.89 | 0.82 | 0.74 |
Novo Nordisk A/S has generally positive cash flows and wider gross margins than its peer group. Additionally, the company's financial statements display positive EPS growth and healthy leverage levels. However, the firm has not enough current assets to cover current liabilities because its current ratio is 0.74.
